Private Credit's Liquidity Crunch Draws a Bold Bet from Boaz Weinstein

Boaz Weinstein, the founder of Saba Capital Management, sees trouble brewing in the private credit market. In an interview this week, he described a situation where problems are “multiplying by the quarter,” driven by what he calls a “financial alchemy” that promises investors liquidity that simply doesn’t exist when too many ask for their money back.

Weinstein is putting his analysis into action. His firm, alongside Cox Capital Management, just launched a tender offer to buy a 6.9% stake in a Blue Owl private credit fund at a steep 34.9% discount. The move came after hearing directly from investors desperate to exit. The fund, Blue Owl Capital Corp. II, had already halted regular redemptions and sold $1.4 billion in assets to raise cash, signaling a wider strain. Data from Jefferies shows private wealth flows into such products fell 19% last quarter, with more redemptions expected.

While some question if Weinstein is talking his book to scare sellers, he insists his criticism is separate from his trades. He’s even bought shares in giants like Ares, Apollo, and Blackstone, betting they’ll survive any shakeout. His real concern is structural. He points to firms like Cliffwater, which invests in other managers rather than owning loans directly, calling it a “turducken” of layered risk. He predicts Cliffwater could soon face redemption requests of 10-20%, testing its ability to pay.

Weinstein’s broader play involves shorting public credit, which he views as wildly overpriced, while waiting for a chance to buy distressed private credit later. “When the economy slows,” he said, that will be “one of the best opportunities” of his career. For now, the market’s cracks are creating a high-stakes game for those with cash and conviction.